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Why Is Maxwell (MXWL) Down 3.1% Since Last Earnings Report?

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A month has gone by since the last earnings report for Maxwell Technologies (MXWL - Free Report) . Shares have lost about 3.1% in that time frame, underperforming the S&P 500.

Will the recent negative trend continue leading up to its next earnings release, or is Maxwell due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important drivers.

Maxwell Q2 Loss Wider Than Expected, Revenues Miss

Maxwell Technologies reported adjusted loss of 21 cents per share in the second quarter of 2018, which was wider than the Zacks Consensus Estimate of loss of 19 cents. On a year-over-year basis as well, the bottom line widened from the year-ago loss of 15 cents per share.

Excluding one-time items, the company incurred loss of 30 cents per share, wider than loss of 28 cents reported in the prior-year quarter. The downside was due to lower revenues on a year-over-year basis.

Revenues

Maxwell Technologies’ second-quarter revenues of $29.5 million missed the Zacks Consensus Estimate of $31 million by 5%. Also, the top line decreased 20.6% from the year-ago figure of $37.1 million.

While high voltage revenues fell 43.8% in the quarter, energy storage revenues declined 9.5%, resulting in the overall decrease in total revenues.

The recent U.S. tariffs on China imports as well as unclear U.S. tax incentive policy caused uncertainty for some of the company’s customers, which in turn affected its high voltage capacitor revenues. The tariffs imposed by the U.S. administration also weighed on energy storage revenues.

Operational Highlights

In the quarter under review, the company’s cost of revenues was $24 million, down 18.1% year over year.

Total operating expenses were $15.4 million compared with $16.6 million in the prior-year quarter.

Capital expenditures during the second quarter were $3.9 million, primarily related to the Korea manufacturing facility expansion as well as ultracapacitor, lithium-ion capacitor and dry battery electrode equipment.

Financial Condition

As of Jun 30, 2018, Maxwell Technologies had cash and cash equivalents of $21.5 million compared with $50.1 million as of Dec 31, 2017.

As of Jun 30, 2018, long-term debt (excluding current portion) was $36 million compared with $35.1 million as of Dec 31, 2017.

Net cash used in operating activities was $14,790 million at the end of second-quarter 2018, up from $2,677 million at the end of the prior-year period.

Highlight of the Quarter

In the reported quarter, Maxwell announced the launch of its new Grid Cell Pack and Grid Energy Storage System, two new highly scalable system solutions designed to deliver reliable, fast responding, long lifetime storage in grids and microgrids.

Guidance

Maxwell Technologies expects total revenues in the range of $32-$36 million for third-quarter 2018. The company projects adjusted net loss to be 18 cents per share.

Adjusted gross margin is expected in the range of 18.5-21.5%. Adjusted operating expenses are projected in the range of $12.8-$13.0 million.

How Have Estimates Been Moving Since Then?

In the past month, investors have witnessed a downward trend in fresh estimates. The consensus estimate has shifted -27.5% due to these changes.

VGM Scores

At this time, Maxwell has a poor Growth Score of F, however its Momentum Score is doing a lot better with a C. However, the stock was allocated a grade of F on the value side, putting it in the fifth quintile for this investment strategy.

Overall, the stock has an aggregate VGM Score of F. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. It's no surprise Maxwell has a Zacks Rank #4 (Sell). We expect a below average return from the stock in the next few months.




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